The three phases of the bull market have different characteristics, summarized as follows:
The characteristic of the first bull market is fast and fierce.
The characteristic of the second bull market is long and slow.
The characteristic of the third bull market is urgent and hot.
We are currently in the second phase of the bull market, characterized by a long duration and slow rise. Therefore, when A-shares adjusted last week, I reviewed and said that the A-share market had not ended, because the bull market had just started rising not long ago, and there was no sign of urgent upward momentum, so the market could not possibly terminate at this time.
The first phase of the bull market was the 924 market last year, when A-shares fell to the bottom; after the extreme comes the extreme good, a policy triggered market frenzy, within less than a month, the Shanghai Composite Index rose from below 2700 points to nearly 3700 points.
The first bull market mainly relies on rebound from the bottom, with bears lacking ammunition; funds can casually pick up chips to push up the stock market, and rapid rises are relatively common.
After the first phase of the bull market reaches a peak, it begins to adjust, while urging that A-shares should be rational and not a quick bull.
Until April of this year, the second bull market officially started.
During the rapid rise of the first bull market, almost no one makes money because it is too fast, mainly because institutional funds are building their bottom positions, they have judged the bottom area of A-shares and picked up the cheapest chips.
By the second phase, the market's profit-making effect gradually improves, institutions and retail investors compete to enter the market, the main line becomes clear, trading volume expands, the bull market is fully established, and new investors arrive.
The second bull market is the phase where retail investors find it easiest to make money, with the stock market rising and falling; retail investors are relatively restrained, and good stocks can quickly recover even after adjustments, as everyone sees the market continuously breaking new highs in a spiral of belief and doubt.
By the time we reach the third bull market, news of the bull market is everywhere; not only do the old men at the village entrance know about the A-share bull market, even elementary school students want to try their luck with their parents' accounts.
At this time, the enthusiasm for A-shares reaches its peak, with every household discussing stocks, and the index continues to soar, just more urgently, some people also start to leverage, greatly increasing risk.
The main reason for the rapid rise in the third bull market is that the market is severely overvalued, profit-taking chips have begun to be hard to hold, and there is a desire to exit, but the volume of these chips is very large. If they move too quickly, it can easily cause panic in the stock market, so many wealth-making news will appear in the stock market to attract enough buyers.
The end of the hot and urgent third bull market leaves a mess behind.
Of course, this is a characteristic of past A-shares, and now A-shares have changed, hoping this round can be slower, extending the second bull market and controlling the third, so that retail investors can truly make money in the stock market.
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